>> this is a fox news special presentation. >> that evening from the university of denver. i am shepard smith. just moments from now, we expect president obama and his republican challenger, mitt romney, to take the stage for the first of three presidential debates. both candidates have spent most the cameras to prepare for tonight's debate. for governor romney, he has

logged plenty of debate time during the gop primaries but he has not gone head-to-head the presidency untillnow. tonight's face-off will focus on domessic policy, including health care, the role of governments, and the number one issue on voters' minds, the economy. you can expect both candidates to have a say on the 8.1% of the unemployment rate and the national debt. keep in mind with early voting under way in 10 states already, many americans have already cast their ballots. still governor romney and presideet obama have plenty of opportunity to hurt or help their campaign in the next nine minutes. no cheering, no. now, the moderator, jim lehrer

of pbs. >> good evening from maaness arena at the university of denver in denver colorado. i am jim lehrer of pbs news hour, and i welcome the new to the first of the 2012 presidential debates between president obama, the democratic nominee, and former massachusetts governor, mitt romney, the republican nominee. this debate and the next three, two presidential, one ice- presidential, are sponsored by the commission of presidential debates. tonight's nine minutes will be about he domestic feature and will follow a format designed by the commission. there will be six roughly 15 minute segments with two-minute answers. for the first question, then an open discussion for the remainder of this section. i made the final selections and

for the record, they were not submitted for approval to the commissionnare the candidates. this segment, as i announced in advance, will be threeeon the care, the role of government, and governing. with an emphasis throughout on the differences, specifics, and choices. both candidates will have post statements. the audience in hall has promised to remain quiet. so we may all concentrate on what the candidates have to say. there is a noise exception right now, though, as we welcome president obama and governor romney. [cheees and applause]

>> dimon, welcome to you both. -- gentlemen, welcome to you both. let's begin with jobs. what are the major differences between the two of you about how you would go about creating jobs? each of you have two minutes to start big the coin toss has determined that the president will go first. >> thank you very much, jim, for this opportunity. i want to thank you for your hospitality. there are a lot of. i want to make tonight, but the most important one is that 20 years ago, i became the luckiest

man on earth, because michelle obama agreed to marry me. i just want to wish you a happy anniversary and let you know that a year from now, we will not be celebrating it in front of 40 million people. four years ago, we went through the worst financial crisis since the great depression. the auto industry was on the brink of collapse. the financial system -- because of its resilience and the determination of the american people, we have begun to fight our way back. the auto industry has come roaring back and the economy has begun to rise. we all know we still have a lot of work to do. the question tonight is not where we have been, but where we are going. governor romney says that if we

roll back regulations and cut back taxes, well, we will be better off. i have a different view. it is important to develop new sources of energy here in+ america, that we change our tax code to make sure we are helping small businesses and companies investing here in the united states, that we take some of the money we are setting as we wind down two wars, to rebuild america, and we reduce our deficit in a balanced way that allows us to make these critical investments. ultimately it's up to the voters, to you, which path we should take. are we going to double down on the top-down economic policies that help us get into this mess, or do we embrace america doing best when the middle-class. >> of trichet the chance to be here with the president and be

at the university of denver -- i appreciate the chance to be here with the president. congratulations to you, mr. president, under anniversary. i am sure this is the most romantic place you can imagine being, here with me. i have had the occasion of the last couple of years in meeting people across the country. i was in dayton, ohio, and a woman grabbed my arm and said i have been out of work since may, can you help me? yesterday i was at a rally in denver and a woman came up to be with the baby in her arms and said my husband has had four jobs in three years. he lost his most recent job and we have now just lost our home, can you help us? the answer is yes, we can help, but it will take a different path, not the one we have been on, not the one the president described as a top down, cut taxes for the rich. that is not what i am going to do. i plan has five basic parts.

one gives energy independence and create about 4 million jobs. number two, open up more trade, particularly in latin america. number three, make sure our people have the skills needed to succeed and the best schools in the world. we are far away from that nnw. number four is this to a balanced budget. no. 5, champion small businesses. it is small business that creates the jobs in america. over the last four years, small business people have decided that america may not be the place to open a new business, because new business start-ups are down to a 30-year low. i know what it takes to get small business going again. i am concerned the path we are on has just not been successful. a bigger government, spending more, taxing more, regulating more, trickle-down government is not the right answer for america. i will restore the vitality to

get america working again. thank you. >> mr. president, please respond directly to what the prrsident reject to what mr. romney just said about the trickle-down approach. >>+ amid talk specifically about what i think we need to do. first, we've got to improve our we have made enormous progress drawing ideas both from democrats and republicans that are already starting to show gains in some of the toughest to deal with students. we have a program called race to the top that has raised standards are around the country. i want to hire 100,000 new math and sciencc teachers and create 2 million more stott -- spots in our community colleges so that people can get trained for the jobs that are out there right now. and i want to make sure that we keep tuition low for our young people. when it comes to our tax code,

governor romney and i both agree that our corporate tax rate is too high. i want to lower it, particularly for manufacturing. i also want to close those loopholes that are giving incentives for companies that are shipping jobs overseas. i want to provide tax breaks for companies that are investing here in the united states. on energy, governor romney and i both agreed that we have to boost american energy production, an oil and natural gas production are hired and have been in years. but i also believe that we have to look at the energy source of the future like wind, solar, and biofuel, and make those investments. all of this is possible. in order for us to do it, we do have to close our deficits. how do we do with our tax code, and how do we make sure that we are reducing spending in a responsible way? this is where there is a difference, because governor romney central economic plan

calls for a tax cut on top of the bush tax cuts, and $2 trillion in additional military ssending. how we pay for that, reduce the deficit, and make the investments that we need to make without dumping those costs on to middle-class americans is one of the central questions of this campaign. >> both of you have spoken about a lot of different things. we will try to get through them in as pacific away as we possibly can. governor romney, -- in as specific as a way as we possibly can. governor romney, do you have a questiin you would like to ask the president about what he just said? >> i don't have a $5 trillion tax cut or a tax cut of the scale you are talking aboutt i am not going to reduce the sharr of taxes paid by high- income people. high income people are doing just fine in this economy and they will do fine whether you

are president or i am. the people you are having a hard time right now our milky income ameeicans. are middle incooe americans. it has been a crushinn. electric rates are up. food prices are up. health-care costs have gone up by $2,500 per family. middle income families are being crushed, and for the answer of how to get them going again, you describe it, balancing our budget, energy, those are the cornerstonee of my plan. first, education. i agree, education is key for the future of our economy. our training programs right now, 47 of them are housed in the federal government, reporting to eight difffrent agencies.

we've got to get those dollars back to the states and go to the workers. the secondary, taxation. we agree, we have to bring the tax breaks down both for corporations and for individuals. in order to not lose revenue, also lowered deductions and credits and exemptions so we can take in the same amount of money when you account for growth. the third area, energy. energy is critical, and production of oil and gas in the u.s. is up, but not due to his policies, in spite of his policies. mr. president, all the increase in natural gas and oil has happened on private land, not on government land. on government land, your administration has cut the number of permits and licenses in half. i am president, i will double them, and also get the oil from offshore and alaska, and i will bring that pipeline in from

canada. by the way, i like coal. people in the coal industry feel it is getting crushed by its -- by your policy. i want to get north america at energy independence so we can create those jobs. finally, with regards to that tax cut, i am not looking to cut massive tax and reduce the revenues going to the government. my number one principle is there'll be no tax cut that adds to the deficit. no tax cut that adds to the deficit. i do want to reduce the burden being paid by middle income americans. that also means i cannot reduce the burden paid by high-income americans. any language to the contrary is simply not accurate. -p>> let's talk about taxes, because i think it is instructive. four years ago when i stood on the stage, i said that i would cut taxes for middle-class families. that is exactly what i did. we cut taxes for middle-class

families by about $3,600. the reason is because i believe that we do best when the middle- class is doing well. by giving them those tax cuts, they have more money in their pocket. maybe it does not buy new car. they are in a better position to weather the extraordinary recession we went through. they may be able to buy new computer for their kid who is going off to college. governor romney's proposal that he has been promoting for 18 months calls for of five trillion dollars tax cut on top of $2 trillion of additional spending for our military. he is saying he is going to pay for its by closing loopholes and deductions. the problem is he has been asked over 100 times how to close those deductions and loopholes, and he has not been able to identify them.

i am going to make an important point here, jim. when you add up all the loopholes and deductions that upper-income individuals are currently taking advantageeof, you don't come close to paying for $5 trillion in tax cuts and $2.20 trillion -- $22million in additional military spending. the only way to meet his plan of not adding to the deficit iss families, the average middle- class family with children would pay about $2,000 more. that is not my analysis, that is the analysis of economists who have looked at this thing. that kind of top down economics where folks at the talks are doing well and the middle class families are burdened further, that is not what i believe it is a recipe for economic growth.

just a on taxes for a moment. >> virtually everything he just said about my tax plan is inaccurate. if this were attacked and i was asked to support, i would absolutely not. i had said i will not put in place a tax plan that adds to the deficit. no economist can claim that mitt romney tax plan thattadds $5 trillion. number two, i will not reduce the share paid by high-income individuals. i have five boys. i am used to people sang something that is not always true, but to keep on repeating it and hoping all the mahli i will believe it. that is the case. i will not reduce the taxes paid by high-income americans. i will not under any

circumstances raise taxes on middle income families. there are a ton of studies hat looked at the study described and say this simply wrong. i saw a study that came out today that says you are going to raise taxes by $3,000 to four income families. on middle let's get to the bottom line. i want to bring the rates down at the same time i lower deductions and exemptions and so forth so we keep getting the revenue read. the reason is because small business pays that individual rate. 54% of america's workers work in businesses that are taxeddnot at the corporate tax rate, but at the individual tax rate. if we lower that rate, they will be able to hire more people. for me, this is about jobs. this is about jobs for the american people. >> the challenge what the governor just said about his plan? >> for 18 months -- five weeks

before the election he is saying that his big, bold idea is never mindd the fact is that if you lower the rates the way you describe them, it is not possible to come up with enough deductions and loopholes that only affect high- income individuals to avoid either raising the deficit or burning the middle class. it is math, it is arithmetic. governor romney and i do share a deep interest in encouraging smalllbusiness growth. at the same time that my tax plan has already lowered taxes for 98% of families, i also lowered taxes for small business 18 times. what i want to do is continue the tax cuts that we put into place for small business and families, but i have said that for incomes over $250,000 a

year, that we should go back to the rates that we had when bill clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a lot of millionaires to boot. by doing that, we can not only reduce the deficit, not only encourage job growth for small business, but we are also met the devil to make the investments necessary in educatton. we do have a difference when it comes to the definition of small business. under my plan,,97% oo small businesses would not see their income taxes go up. governor romney says the top 3% of the job creators. under his definition, there are a whole bunch of millionaires and billionaires are a small business. under his plan, donald trump is a small-business owner.

that kind of approach, i believe, will not grow our economy, because the only way to pay for it without either burgeoning middle-class are raising up the deficit is to make drastic cuts in things like education, making sure that we are continuing to invest in basic science and research, all the things that are helping america grow. i think that would be a mistake. >> just so everybody understands, we are way over our first 15 minutes. we are still on the economy. we'll come back to taxes and move on to the deficit and a lot of other things, too. >> mr. president, you are absolutely right, with regard to 97% of business is not taxed at the 30 boppers in tax rate,

they are taxed at lower tax rate. but those top 3% employee half the -- those are the businesses that employ one-quarter of all the workers in america. your plan is to take that tax rate from 38% to 40%. federal income tax, federal payroll tax, state income tax, state sales tax, gasoline tax, it adds up to 50% oo what they earn. your plan is to take the tax rate on successful small businesses from 35% to 40%. the national federation of businesses has said that will cost 700,000 jobs. i don't want to cost jobs.+ my priority is jobs. what i'd do is bring down the tax rate, lower deductions and

exemptions, the same idea behind bowles-simpson, by the way. get the breaks down, lower deductions and exemptions, to create more jobs. there is nothing better for+ getting us to a balanced budget and having more people working, earning more money, pay more taxes. that is by far the most effective and efficient way to get this budget balanced. >> you mmy want to move on to another topic, but i would just say to the american people, if you believe that we can cut trillion in additional spending that the military is not asking for, just to give you a sense, over 10 years, that is more than our entire defense budget, and you think that by closing loopholes and deductions for the well-to-do, somehow you will not end up picking up the tab, then it governor romney's plan may work for you. but i think just common sense and our history shows that is

not a recipe per job growth. we have tried both approaches.. the approach that governor romney is talking about is the same sales pitch that was made in 2001 and 2003. we ended up with the slowest job growth in 50 years. we ended up moving from surplus culminated in the worst financial crisis since the great depression. bill clinton created the approach i am talking about. we went from deficit to surplus, and businesses did very well. in some ways, we have some data on which approach is more liiely to create jobs and opportunities for americans, and i believe the economy works best when middle- class families are getting tax breaks so they have some money in their pockets, and those of us who have done extraordinarily well because of this magnificent country that we live in, we can

pfford to do a little bit more to make sure we are not blowing up the deficit. >> it is the first word that segment, i get the last word of that segment. let me repeat what i said. i am not in favor of a $5 trillion tax cut. my plan is not to put in place in the tax cut that will add to the deficit. number two, let's look at history. my plan is not like anything that has been tried before. my plan is to bring down rates but also bring down deductions and exemptions and credits at the saae time. the revenue stays in, but we bring down rates tt get more people working. my priority is putting people back to work in america. they are suffering in this country. look at the evidence of the last four years. it is absolutely extraordinary.

we have 23 million people out of work or who have stopped lookiig for work in this country. when the president took office, there were 32 million people on food stamps. 47 million are on food stamps today. going forward with the status quo is not going to cut it for the american people who are struggling today. >> this is their radically now the second segment, still on the economy. specifically on what to do what3 you each have two minutes on this. governor romney, you will go first because the president went first on segment one. what are the differences between the two of you as to how you would go about tackling the deficit problem in this country? >> i am glad you raised that. it is a critical issue, not just an economic issue.

i think it is a moral issue. it is not moral of my generation to keep spending massively more than we taken, knowing those burdens will be passed on to the they will be paying the interest and principal all their lives. how do we deal with that? mathematically, there are three ways you can cut the deficit. one, of course, is to raise taxes. no. 2 is to cut spending, and number three is to grow the economy. if more people work in a growing economy, they are paying taxes, and you can get the job done that way. the president would prefer raising taxes. i understand that. the problem of raising taxessif it slows down the rate of growth, and you can never quite get the job done. a lot to lower spending and encourage job growth at the same time. i will eliminate all programs -- it is worth borrowing money

from china to pay for it, i will keep it. if not, i will get rid of it. -pi am going to stop the subsidy to pbs. i am not going to keep spending money on things and borrowing money from china to pay for it. number two, i will take programs that are currentlyygood programs but could be run more efficiently at the state level and send it to the states. number three, i will make government more efficient and cut back the number of employees and combined some agencies and departments. the cuts would be done by attrition, by the way. the president said he would cut the deficit in half. unfortunately, he doubled it. trrllion dollar deficit for the last four years. president has put us in almost as much public debt held by the public as all prior presidents

combined. >> when i walked into the oval office, i had more than a trillion dollar deficit reading me, and we know where it came from. two wars that were paid for on a credit card, two tax cuts that were not paid for, and a whole bunch of programs that were not paid for, and then a massive economic crisis. despite that, yes, we had to take some initial emergency3 not slip into a great depression. we also said, let's make sure we are cutting out those things that are not helping us grow. 77 government programs, everything from aircraft, 18 government programs for education that were not helping kids learn. we went after medical fraud in medicare and medicaid very aggressively, more aggressively than ever before, and it saved tens of billions of dollars.

we cut a trillion dollars out of the discretionary domestic budget, the largest cut since dwight eisenhower. we all know we've got to do i have put forward a specific $4 trillion deficit reduction plan. it is on our website. you can look at all the numbers. the way we do it is $2.50 for every cut, we ask for $1 of additional revenue, paid for, as i indicated earlier, by asking those of us who have done very well in this country to contribute a little bit more to reduce the deficit. governor romney mention the bowles-simpson commission. that is how the bipartisan commission suggested we do at,

with some revenue anddsome spending cuts. this is a major difference that governor romney and i have. when governor romney stood on the stage with other republican candidates for the nomination, he was asked, would you take $10 of spending cuts for just $1 of revenue? and he said no. now, if you take such an unbalanced approach, then that means you are going to be guiding our investments in schools and education. he talked abbut medicaid and how we could send it back to thh state, but effectively that program for nursing homes, for kids with disabilities, and that is not the right strategy for us >> governor, what about simpson- bowles? do you support ssmpson-bowles?

>> i have my own plan. it is not the same as simpson- bowles. the president should have grabbed it, if you want to make forward. you have been presidents four years. he said he would cut the deficit in half. it is four years later. you have said before you cut the deficit in half. we still showed trillion dollar deficits every year. that does not get the job done. why is it that i don't want to raise taxes -- you said back in 2010, we have to understand the taxes we have now. when the economy is growing slower like this, when we are in

recession, you should not raise taxes on anyone. the economy is still going slow. it is growing much more slowly now than when you made that statement. if you believe the same thing, you just don't want to raise taxes on people, the reality is it is not just wealthy people. it is not just donald trump you are taxing. employ one quarter of thehat workers in america. these small companies that are taxed as individuals. you raise taxes and you kill jobs. that is why the national federation of businessmen said jobs. i don't want to kill jobs in this economy. >> we have had this discussion before. >> in order to reduce the deficit, there has to be revenue in addition to cuts. >> governor romney has ruled out revenue.

>> the revenue i get is by more people working, getting higher pay, pay more taxes. that is held to get growth and balance the budget. but the idea of taxing people more, putting more people out of work, you'll never get there. it will never balance the budget by raising taxes. spain spend 42% of their economy on government. i don't want to go down that path. i want to go down the path of growth, that puts americans to wook, with more money coming in because they arr working. >> mr. president, you are saying in order to get the job done, it has to be balanced. >> this is not just when it comes to individual taxes. taxes. i have identified areas where we could come right away, make a changeethat i believe would actually help the economy. the oil industry gets $4 billion a year in corporate welfare.

basically, they get deductions that small businesses that governor romney referred to do not get. does anybody think that exxonmobil needs some extra money when they are making money every time you go to the pump? why would we want to eliminate that? why don't we eliminate tax breaks for corporate jets? that can probably afford to pay full freight, not get a special rate for it. governor romney said in a revenue neutral way he wants to close loopholes. he had not identified what they are, but that would bring down the corporate rate. i want to do the same thing, but i have \ identified how we can do that. part of the way to do it is not to give tax breaks to companies that are shipping jobs up overseas. but now you can actually take a

deduction for moving a plant overseas. i think most americans would say that does not make sense. if we ttke a balanced approach, what that then allows us to do is also help young people, the way we already have during my administration, make sure they can afford to go to college. it means that the teacher i met in las vegas, a wonderful young lady, says to me, she has 42 kids in her class. some of them are sitting on the floor. unnil they finally get reassigned. they are using textbooks that are 10 years old. that is not a recipe for growth. that is now the that is not how america was built. -- that is not how america was built. if we are asking for no revenue, the magnituue of the tax cuts would in-depth resulting in severe hardship for

people, but more importantly, would not help us grow.. when you talk about shifting medicaid to states, we are talking about potentially a 30% cut in medicaid over time. that may not seem like a big a sheet of paper, but if we are talking about a family with an autistic kid who is dependent on that medicaid, it is a big deal. what ends up happening is, some people in that not getting help. >> it will take a minute to go from medicaid to schools to tax breaks to companies going overseas. first of all, the department of energy has said the tax break for oil companies is $2.80 billion a year.

it is an accounting treatment that has been in place for 100 years. in one year, you provided $90 million in breaks to the green energy world. i like green energy as well, but that is about 50 years' worth of oil and gas receives. largely to small companies, drilling operators and so forth. if we get that tax break from 30 are% down to 25%, it is probably not going to survive. don't forget, you put $90 billion, 50 years worth of i had a friend who said you don't just pick the winners and losers, you just pick the losers.

the second topic, you said getting a deduction for sending a plant overseas, i have no idea where you are talking about. the idea that you get a break for shipping jobs overseas is simply not the case. medicate to states? i am not quite sure where that came in, except that i said i would like to take the medicaid dollars that go to states and say to states, you get what you got last year plus inflaaion plus 1%. the new manager care for your report in the way you think best. i remember as a governor in this idee was floated by tommy thompson, the governors, republicans and democrats, said please let us do that. we can care for our own poor and so much better and more effective ways than having the federal government tell us how to care for our poor. the whole idea is that states are the laboratories of

democracy. don't tell people what kind of training programs that have to have and what kind of medicaid have to have. let the states do this. if the states get in trouble, we can step in and try to find a way to help them. the right approach is one that relies on the prince of our people and states. >> this is segment 3 on the economy, environment. the first answer goes to you, mr. president. there is the major difference in your view on social security? >> we have a somewhat similar position. social security is structurally sound.+ pt will have to be tweaked the way was by ronald reagan and tip o'neill, but it is structurally sound. i want to talk about the values behind social security and medicare.

my grandmother helped raise me. my grandfather died awhile back. my grandmother died three days before i was elected president. she only had a high school education, started as a secretary and ended up being the vice president of a local bank. she ended up living alone, by choice. the reason she could be independent was because of sscial security and medicare. she had worked all her life, put in the money, and understood there was a basic area of helping the poor.%+ that is what i think of when i think of entitlement. the name itself imply some sense of dependency on theepart of the spokess there are millions of people out there who are counting on this.

my approach is to say how we -pstrengthen this. in medicare, what we did was we said we are going to have to bring down the cost if e are going to deal with long-term to do that, let's look at where some of the money is going. $700 billion for rebel to ave from the medicare program by no longer overpaying insurance companies, by making sure we were not overpaying providers, and using that money where we are actually able to lower prescription drug costs for seniors by an average of $600 and we were able to make a significant dent in providing them with the kind of preventive care that will ultimately save money throughout the system. the way for us to deal with medicare in particular, when it comes to social security, you don't need a major structural change. >> governor romney, you have two

minutes on social security and entitlement. >> our seniors depend on these programs, and i know any time we talk about entitlements, people become concerned that something is going to happen that will change their lives for the worse. the answer is that neither the president nor i are proposing any changes to any current retirees or near retirees, either to social security or medicare. if you are 60 or oller, you don't have to listen any further. for younger people, we need to talk about what changes will be occurring. i was wrong when i said the president is not proposing any changes for current retirees. he isson medicare, on social security is not. on medicare, the current retirees, he is cutting $716 billion from the programm he says by not overpaying hospital than providers. across the board, everybody will that is not ust going after

places where there is abuse. some 15% of hospitals and nursing homes that they will not take any more medicare patients under that scenario. 15% offdoctors that they will not take more medicare patients. we have four million people on medicare advantage that will lose medicare advantage because of those $716 billion in cuts. i cannot understand how you can cut medicare $716 billion for current recipients of medicare. you point out, we are putting some back, we will give a better prescription program. that is $1 for every $15 you have cut. that is not a good trade. i want to take that $716 billion of cut and put it back into medicare. we can include a prescription program, but the idea of cutting $716 billion from medicare to be able to balance the additional cost of obamacare, in my opinion, would be a mistake. with regards to young people

coming along, i have proposals to make sure social security and medicare are there for them without any question. >> first of all, it is important for governor romney to present this plan that he says will only affect folks in the future. the essence of the plan is that he would turn medicare into a voucher program. is call premium support but it is understood to be a voucher program. >> and you don't support that. >> i don't, and let me explain why. if your ticket for are people like, you might want to listen -- if you are 54 or 55, you might want to listen. the idea that is going to be presented by congressman run, you are running mate, is that we would get a voucher to seniors, and they could go out and the private marketplace and buy their own health insurance. the problem is that, because the voucher would not necessarily

keep up with health care inflation, it was estimated that this was cost the average senior about $6,000 a year. in fairness, what,,romney has now said is it will be paying for additiooal medicare alongside it. there is still a problem. -pthe insurance companies are pretty clever in figuring out who or theeyounger nd healthier seniors. they recruit them, leaving the older, sicker seniors in medicare. every economist who has looked at it says over time, the traditional medicare system will collapse then you have folks like my grandmother at the mercy of the private insurance system at the time when they are most in need of decent health care. i don't think doctors are the right way to go. this is not only my opinion. aarp things that the savings we obtain from medicare bolster the system, link in the medicare

trust fund but eight years, benefits were not affected at all, an ironic but, if you repeal obamacare, and i have become fond of that term, obamacare -- if you repeal it, what happens is, those seniors will be paying six had dollars more in prescription bills. they will have to pay copays3 services that will keep them held there, and the primary beneficiary of that repeal or the insurance companies that are estimated to gain billions of dollars back and they are not making seniors any healthier. i don't think that is the right approach when it comes to making sure medicare is all but over the long term. >> what i support is no change for current retirees and the retirees to medicare. the president supports taking

$716 billion out of that program. no. 2 is for people coming along that our young. what i did to make sure we can keep medicare in place for them is to allow them to either choose the current medicare program or a private plan of their choice. they will have at least two plants that will be entirely at no cost to them. you don't have to pay additional money, no additional $6,000. that is not going to happen under these two plans. they will be having did get traditional medicare or they can get a private plan. in my position, would rather have a private plan. but people make their own choice. the only thing they have to do to save medicare, we have to have the benefit high for those that are low-income, but for higher income people, that led to lower some of the benefits. we have to make sure this

program is there for the long term. that is the plan i put forth. the idea came not from paul ryan but also it came from bill clinton's chief of staff. this is an idea that has been around for a long time. we are saying let's bring competition into the medicare were also people can get a choice of different plans at lower cost, better quality, and better competition. >> first of all, every study has shown that meeicare has lower administrative costs than private insurance does, which is why seniors are generally pretty happy with it. private insurance has to make a profit. there is nothing wrong with that, that is what they do. so you have higher administrative costs, plus profit on top of that, and if you were going to save any money through what governor romney is proposing, what would have to happen is, the money has to come from somewhere.

when you move to a voucher system, you are putting seniors at the mercy of those insurance companies. over time, if traditional medicare has decayed or fall apart, and they are stopped. this is the reason why aarp has said that your plan would weaken medicare substaatially, and that is why they were supporters of the approach thaa we took. one last point i want to make, we do have to lower the coot of health care. >> that is a big topic. >> let's get back to medicare. the president said that can provide the service at lower cost. the private sector is typically able to provide a better

product at a lower cost. text can the to be agreed that the voters have a choice on medicare? to finish briefly on the economy, what is your view about the level of federal regulation in the economy right now? is there too much, and in your case, mr. president, should there be more? we will go for just a few minutes and then we will go to health care. >> regulation is essential. it can have a free market work%+ if you don't have regulation. as a business person, i need to know the regulations. you cannot have people opening up banks in their garage and making loans. the economy can work. at the same time, regulation can become excessive. it can become out of date.

some of he legislation has been passed during the president's term, you have seen regulation become excessive and itthas hurt the economy. let me give you an example. dodd-frank was passed, and include the number provisions that have unintended consequences that are harmful to the economy. one is coming designates a number of banks that are too big to fail, and they are effectively guaranteed by the federal government. this is an enormous boon for them. 122 small and community banks have closed because of dodd- frank. >> you would repeal dodd-frank? >> there are some parts of dodd- frank that make all the sense in the world. you need transparency. indeed to have leverage limits. thist's let him respond to

specific on dodd-frank and what the governor just said. >> i think this is a great example. the reason we have been in such an enormous economic crisis was prompted by reckless behavior across the board. it was not just on wall street. you had loan officers who giving loans and mortgages that shoold+ not have been given because there were folks that did not qualify. people were borrowing money to buy houses they could noo afford. credit agencies were stamping these as a-1, great investments when they were not. you had banks making money hand over fist, turning out products that the banks themselves did not understand, in order to make big profits, but knowing that it made the entire system vulnerable. so what diddwe do? we stepped in and had the toughest reforms on wall street

since the 1930's. we said to the banks, you have to raise your capital requirements. you cannot engage in this risky behavior that is putting main street at risk. you have to have a living will so we can know how you are going to wind things down. we also made sure that all the help we provided those banks was paid back, every single dime, with interest. governor romney has said he wants to repeal dodd-frank. it appears we have some agreement that for a market place to work, it has to have some regulation. in the past he has said he just wants to repeal dodd-frank, roll it back. so the question is, does anybody out there think that the big problem we had is that there was -ptoo much oversight and regulation of wall street? because if you do, then governor romney is your candidate.

but that is not what i believe. >> we have to have regulation in wall street. that is why i would have regulation, but i would not designate by banks as too big to fail and give them a blank check. that is one of the unintended consequences of dodd--rank. it was not thought through properly. it is killing regional and small banks. he said we were giving mortgages to people who were not qualified. exactly right. one of the reasons for the great financial calamity we had. so dodd-frank correctly says we need to qualify mortgages, and if you give a mortgage that is not qualified, there are big penalties. except it did not belong to define what a qualified mortgage is. mortgage loans. try to get a mortgage these days. dodd-frank did not anticipate putting in place the kind of

regulations you have to have. sometimes they did not come up with clear reguuations. i want to make sure we don't hurt the functioning of our marketplace and our businesses, because i want to bring back housing and get good jobs. >> anothee clear difference between the two of you, obviously. let's move to health care, where i know therr have been clear differences. that has to do with the affordable health care act, or you go first, governor romney. you what the affordable care act repealed. >> i sure do. in part, it comes again from my experience. in new hampshire, a woman came to me and said i cannot afford insurance for myself and my son. i met a couple from apple, wisconsin is thht they cannot afford insurance.

the number of small businesses i have gone to that say they are dropping insurance because they cannot afford it. the cost of health care is just prohibitive and we have to deal with it. when you look at obamacare, the congressional budget office has said it will cost $2,500 a year more than traditional insurance. so it is adding to costs. when the president ran for office, heesaid that by this year he would have brought down the cost of insurance for each family by $2,500. instead, it has gone up by that amount. it is expensive. expensive things hurt families. that is one reason i don't want it. it puts in place and an elected board that ultimately will tell people what kind of treatment they can have. i don't like that. there was a survey done of small businesses across the country that said what has been the

hiring plans? three-quarters of them said it makes us less likely to hire people. i just don't know how the presideet could have come into office, taken 23 million people out of work, rising unemployment, an economic crisis at the kitchen tabll, and spent two years fighting for obamacare instead of fighting for jobs for the american people. the best course for health care is to do what we do in my state, craft a plan at the state level and then let's focus on getting the costs down for people, rather than raising them with an additional $2,500 premium. >> four years ago when i was running for office, i was travelling around and having no same conversations that governor romney talks about. it was not just that small businesses were seeing costs skyrocket and they could not get affordable coverage, even if they wanted to provide it to

their employees. it was not just that this was the biggest driver of our federal deficit or overall health-care costs, but it was families who were worried about going bankrupt if they ggt sick. millions of families all across the country that had a pre- existing condition. they might not be able to get coverage at all. if they did have coverage, insurance companies might impose an arbitrary limit. somebody gets really sick, lo and behold, they don't have enough money to pay the bills because the insurance companies say they have hit the limit. soowe did work on this alongside working on jobs, because this is part of making sure that middle- class families are secure in an italian exactly what obamacare did. number one, if you've got health insurance, it does not mean a government takeover. you keep your own insurance. it does say insurance companies

cannot jerk you are around. they cannot impose arbitrary lifetime limits. they have to let you keep your kids on your insurance plan until they are 26 years old. it also says that you are going to have to get rebates if insurance companies are spending more on administrative costs and profit than they are on actual care. number two, if you don't have health number tto, if you do not have health insurance, we are setting up a group plan that allows you to benefit from group rates that are 18% lower than if you are out there trying to get insurance on the individual market. the last point i would make -- >> two minutes is up. >> no, i had five seconds before you interrupted me. [laughter]

the irony is we have seen this model work very well. in massachusetts, because governor romney did a good thing working with democrats in the state to set up what is essentially the identical model and, as a consequence, people are covered there. it has not destroy jobs. as a consequence, we now have a system in which we have the opportunity to start brrnging down costs as opposed to leaving millions of people out in the cold. >> your five seconds were up a long time ago. tell the president directly why you think what he said is wrong about obamacare. >> i did with my first statement. i will go on. >> please elaborate. >> i like the way we did it in massachusetts. i like the fact that in my state, we have republicans and democrats coming together to work together. what you did was pushed

through a plan without a single republican vote. what massachusetts did was quite extraordinary. you pushed it through anyway. instead of bringing america together and having a discussion about the support topic, you put forth something you thought was the best answer and forced it through. 200 legislators on my legislator. what were some differences? we did not raise taxes. you raise them by a trillion dollars. we did not cut medicare by $716 billion. we did not put in place a board that the tell people what treatments they will receive. we did not also do something i think a number of people across this country recognize which is put people in a position where they will lose the insurance they have and what it. right now, it is set up to 20

million people will lose their insurance as obamacare goes into effect next year. likewise, a study says 30% of them are anticipating dropping people from coverage. for those reasons, for the tax, for medicare, for this board, and for people losing their insurance, this is why the american people do not want obamacare, it is why republicans said do not do this, and republicans had a plan. they put a bipartisan plan out. it was swept aside. i think something this big, this important, has begun on a bipartisan basis. we have to have a president who can reach across the aisle and have input from both parties. >> governor romney aid this has to be done on a bipartisan basis. this was a bipartisan idea. it was a republican idea. governor romney at the beginning of the debate wrote and said what we did in massachusetts could be a model for the nation. i agree the democratic

legislators in massachusetts might have given someeadvice to republicans in congress about how to cooperate, but the fact of the matter is, we use the same advisers and they say it is the same plan. when governor romney talks about this board, for example, what this is is a group of health- care experts, doctors, to figure out how can we reduce the costs of care in the system overall? there are two ways of dealing with our health care crisis. one is to simply leave a whole bunch of people uninsured and let them fend for themselves, so let businesses figure out how long they can see their premiums before they give up and their workers are not getttng insured. or, we could figure out how to make the cost of care more effective. there are ways of doing it. at cleveland clinic, one of

the best health care systems in the world, they provide great care cheaper than average. the reason they do is because they do some smart things. they say if a patient is coming in, let's get all the doctors in at once and to one test instead of having the patient runarounds with 10 tests. let's make sure we are providing preventive care so we+ catch the onset of something like diabetes. he basisproviders on of performance as opposed to on tte basis of how many procedures they have engaged in. what this board does is identify the best practices and let's use the purchasing power of medicare and medicaid to help to institutionalize all of these good things that we do. the fact of the matter is when obamacare is fully implemented, we are going to be in a position

to show that costt are going down. over the last two years, health care premiums have gone up. it is true. they have gone up slower than anytime in the last 50 years.%+ we are already beginning to see progress. in the meantime, folks out there with insurance are already gettingga rebate. a last point.t that governor romney says will replace it with something. he has not describe what exactly it is, other than leaving it to the states. the fact of the matter is some of the prescriptions he has offered like letting you buy insurance across state lines, there is no indication that that will help somebody with a pre- existing condition be able to finally buy insurance. it is estimated by repealing obamacare, you are looking at 50 million people losing health insurance at a time when it is vitally important. >> let's let the governor explain what you would do if

obamacare is repealed. how would you replace it? >> it is a lengthy description. number one, pre-existing conditions are covered under my plan. number two, young people are able to stay under their family plan. that is already offered in the private marketplace. you do not need the government to mandate that. let's go to something the president and i agree on. the key task we have in health care is to get the costs down so it is more affordable for families and then he has as a model for doing that a board of people, an appointed board, who will decide what kind of treatments you ought to have. ii my opinion, the government is not effective in bringing down the cost of almost anythhng. as a matter of fact, free people and free enterprises, trying to find a way to do things better, are able to be more effective at bringing down the costs than the government ever will be. your example of the cleveland

clinic is my favorite point. this is the private market. these are enterprises competing with each other, learning how to do better and better jobs. i used to consult to businesses, hospitals and health-care providers. i was astonished at the creativity and innovation that exists in the american people. care costs down, we do not have to have a board of 50 people telling us what kinds of treatments we should have. we instead be to put insurance plans, providers, hospitals, doctors, on target such that they have an incentive for doing pn excellent job.3 a cllnic is doing it superbly well. cleveland clinic, others. the right answer is not to have the federal government take over health care and start mandating to the providers across america, telling a patient and a doctor what kind of treatment they can

have. that is the wrong way to go. the private market and individual responsibility always work best. >> let me point out first of all this board we are talking about cannot make decisions about what treatments are given. that is explicitly prohibited in the law. let's go back to what governor romney indicated.. under his plan, he would be able to cover people with pre-%+ existing conditions. actually, governor, that is not what your plan does. what it does is to duplicate what is already the law, which says, if you are out of health insurance for three months, you pan end up getting continuous coverage and an insurance company cannot deny you if it has been under 90 days. but that is already the law. that does not help the millions of people out there with pre- existing conditions. there is a reason why governor romney set up a plan he did in

massachusetts. it was not a government takeover of health carr. it was the largest expansion of private insurance. what it does say is insurers, you havv to take everybody. that also means yyu have more customers. but when governor romney says he will replace it with some thing, but can not detail how it will be replaced, and the reason he said the system in massachusetts is because there is not a better way of dealing with the pre-existing conditions problem. he says he will close reductions and loopholes for his tax plan. that is how is going to be paid for. but we do not know the details. he says we will replace dodd- frank, wall street reform. but we do not know exactly which ones. he will not tell us. he now says e will replace obamacare and insures that all the good things are and it --

could things that are in it will be in their. people ask themselves is tte reason governor romney is keeping all of these plans secret because they are too good? is it because middle-class families will benefit too much from them? no. the reason is because when we reform wall street, when we tackle the problem of pre- existing conditions, these are tough problems and we have to make choices. the choices we have made have been ones that ultimately are benefiting middle-class families all across the country. >> we are going to move. >> i have to respond to that. my experience as a governor is if i come in as a -- and lay a piece of legislation and say it is my way or the highway, i do not get a lot done. what i do is the same way ronald reagan worked some years ago. he laid out the principles he was going to foster. he said he will lower tax rates. he said he would broaden the

base. you have said the same thing. will simplify the tax code, broaden the base. i will work together with congress to say, ok, what are the various ways we can bring down deductions. one way would be to have a single number. make up a number. $25,000, $50,000. anybody could have deductions for that amount. that is one way that could do pt. one could follow bulls-ssmpson as a model. -- bowles-simpson as a model. simplify the code and create incentives for growth. with regard to health care, you have remarkable details with resort -- with regards to my pre-existing condition plan.+ you have obviously studied my plan. i do have a plan with people with pre-existing conditions. as part of my health care plan. what we did with massaccusetts is a model for the nation state

by state. i said the federal government taking over the health care for the entire nation and whisking aside the 10th amendment which gives states the rights for these kinds of things is not the course of america to have a stronggr and more vibrant economy. >> that is a terrific segue to our next segment. it is the role of government. the role of government. it is, you are the first, mr. president. do you believe, both of you, but you have the first two minutes on this, do you believe there is a fundamental difference between the two of you as to how you+ view the mission of the federal government? >> i definitely think there are differences. the first row of the fabric -- federal government is to keep the american people say. that is its most basic function. as commander in chief, that is something i have worked on and

thought about every single day i have been in the oval office. but i also believe government has the capacity, the federal government, has the capacity to help open up opportunities and create ladders of opportunity and to create frameworks with the american people can succeed. the genius of america is the free enterprise system. and freedom. and the act that people can go out there and start a business, work on an idea, make their own decisions. but, as abraham lincoln understood, there are lso some things we do better together. in the middle of the civil war, abraham lincoln said, let's help to finance the transcontinental railroad. the national academy of sciences. collegesrt land grant because we want to give these gateways of opportunity for all americans because if all americans are getting

opportunity, we will all be better off. that does not restrict people's freedom. that enhances it. what i have tried to do as president is apply the same principles. when it comes to education, what i have said is we have to reform schooll that are not working. we use something like race to the top. it was not a top-down approach. what we said to states is we will give you more money if you initiate reforms. as a consequence, you have 463 have made a real difference. what i have also said is let's hire another 100,000 math and maintain our technological lead. and people are still to succeed. hard press states right now cannot alter that. we have seen layoffs of hundreds of thousands of teachers over -pthe last several years. governor romney does not think we need more teachers. i do. investment where the federal-

government can help. it cannot do it all. but it can make a difference. as a consequence, we will have a better trained work force and that will create jobs because countries want to local -- companies want to locate in a place where we have skilled workers. >> first, i love great schools. our mmssachusetts schools are ranked number 1 in all 50 states. the key to grade schools are great teachers. i reject the idea i do not -- believe in more teachers. every state should make that decision on the wrong.+ the constitution and the declaration of independence. the role of government is to promote and prrtect the principles of those documents. first, life and liberty. we have a responsibility to protect the lives and liberties of our people. the military is second to none. i cannot believe in cutting our military. ira and i -- i belieee in maintaining the strength of the military. second, it says we are endowed

with our creator with our rights. i said we must maintain our commitment to religious tolerance and freedom in the that statement also says we are endowed by our creator with the right to pursue happiness as we choose. i interpret that as making sure those people who are less themselves are cared by one another. we are a nation who believes we are all children under the same god. thhse ho aae elderly and have problems and challenges we care for them. all these things we desire out of the american heart to provide the pursuit of happiness for our citizens. we also believe in maintaining for individuals the right to pursue their dreams and not have the government substituted self for the rights of free individuals. what we are seeing right now is, in my view, a trickle-down government approach which has government thinking it can do a better job than free people doing their dreams. it is not working.

the proof of that is 23 million people out of work. approve of that is one in six people in poverty. we have gone from 32 million on food stamps to 47 million on food stamps. 50% of college graduates this year cannot find work. we know the path we are taking is not working. it is time for a new path. >> let's go through some specifics in terms of how each of you the role of government. -peducation. does the federal government have a responsibility to improve the quality of public education in america? >> the primary responsibility for education is at the state and local level. the federal government can also play an important role. i agree with secretary arne duncan. he has had ideas before. i congratulate him for pursuing that. the federal government can et local and state schools to do a better job. my own view is added to that. i believe i want the kids who are getting federal dollars from

disabled -- these are disabled%+ kids or lower income kids. i want them to go to school. all federal funds instead of going to the state or the school district, i would have go, if you will, filed a child, and le+ the parent and child choose where to send a student. >> how do you see the federal gooernment's responsibility to improve the quality of but to get rid public education in this country? >> it has a significant role to play. have worked with republican and democratic governors to initiate major reforms and they are having an impact right now. >> is there a difference with your view s and government -- governor romney? >> budgets reflect choices. when governor romney indicates that he wants to cut taxes, and potentially benefit folks like me and him, and to pay for it,

we are having to initiate significant cuts in federal support for education, that makes a difference. his running mate ppt forward a budget that reflects many of the principles that governor romney has talked about. it was not very detailed. this seems to be a trend. what it did do is if you extrapolate how much money we are talking about, we look at cutting the education budget by up to 20%. when it comes to community colleges, we are seeing great work being done out there all the opportunity to train people for jobs that exist right now. one of thh things governor romney and i probably agree on is getting businesses to work with community colleges so they are setting up the training programs -- >> do you agree, the governor? >> let me finish my point. they are partnering.

they are designing training programs and people who are going through them know there is a job waiting for them if they are commlete. that makes a difference but it requires ffderal support. let me say one final example. when it comes to making college affordable, whether it is two year or 4 cups year -- or four year, one thing i id as president as we were sending $60 billion to banks and lenders as middlemen for the student loan program, even though the loans were guaranteed, so there is no risk for the banks and lenders. they were taking billions out of the system. we said, why not cut out the middleman? as a consequence, we have provided millions of more students assistance, lower and keep low interest rates on student loans, and this is an example where our priorities make a difference. governor romney, i genuinely believe cares about education, but when he tells a student that

you should borrow money from your parents to the college, that indicates the degree to which there may not be as much of a focus on the fact that folks like myself, folks like michelle, kids who probably attend the university of denver, do not have that option. for us to make sure they have that opportunity and they can walk through that door, that is vitally important, not just to those kids. it is how we will grow this economy over the long-term. >> we are running out of time. >> mr. president, you were on and -- you own an airplane and a house, but not fax. i will not cut educating -- education funding. i do not have a plan to cut education funding. grants for people to go to college, i will continue to grow. you makk a very good point. the place you put your money makes a clear indication of where your heart is. you put $90 billion into green

jobs. i am all in favor of green energy. $90 billion. that would have hired two million teachers. $90 billion. these businesses, many of them have gone out of business. about half of them you have invested and have gone into -- out of business. phe right course for america's government is not to become the pconomic player, picking winners and losers, telling people what kind of health treatment they health-care system that has existed in this country for a long, long time and has produced the best health records in the world -- world. it is how do we make the private sector become more efficient and effective. how do we get schools be more effective. which a great our schools so parents know which are succeeding so parents can takes kids to schools that are more

successffl. i have had that experience. i do not just talk about it. i have been there. massachusetts schools are ranked number 1 in the nation. this is not because i did not pave commitment to education. it is because i care about education for all of our kids. >> excuse me. we barely have three minutes left. i will not grade the two of you and say your answers have been too long or i have done a poor job. >> you have done a great job. >> the fact is, the role of government and governing, we have lost a pot. we only have three minutes left. before we go to your closing statement. i want to ask, finally, here, and remember we have three minutes total time here. the question is this. many of the legislative functions of the federal government right now are in a

state of paralysis as a result of partisan gridlock. if elected, or if reelected, what would you do about that? governor? >> i had a great experience of being elected in a state where out -- where mm legislator was 87% democrat. i figured out from day one i had to get along and i had worked across the aisle to get anything done. our schools weee number one in the nation did we cut taxes 19 times. as president, i will sit down on day one, actually, the ddy after i get elected. i will sit down with democratic and republican leaders as we did in my state and talk about the issues and challenges in our state. weehave to work on a collaborative spaces. not because we willlcompromise our principles. but because there is common ground. the challenges america faces right now, the reason i am in this race is because there are people who are really hurting in

this country. we face this deficit that could cross future generations -- crush future generations. republicans and democrats both love america, but we need to have leadership. leadership in washington that will actually bring people together and get the job done and could not care less if it is a republican or a democrat. i have done it before. i will do it again. >> mr. president? >> i think governor romney will have a busy first day. he will also repeal obamacare. that will not be popular withh democrats as you are sitting down with them. but my philosophy has been i will take ideas from anybody, democrat or republican, as long as they are advancing the cause of making middle-class families stronger and giving ladders of opportunity to the middle class. that is how we cut taxes for middleeclass and small businesses. that is why weecut what was in advancing that cost. that is how we signed free-trade

deals that are helping us double our exports and sell more american products of from the world. that is how we repealed don't ask don't tell. that is how we ended the ar in iraq as a promise and that is how we will end the war in afghanistan. that is how we went after al qaeda ann bin laden. we have seen progress even under current -- even under republican control of the house of representatives. part of being principled and being a leader is being able to describe exactly what it is you intend to do, not just saying, i pill sit down. you have to have a plan. number two, what is important is you occasionally have to say no tt folks both in your own party and the other party. we have had some fights between the republicans anddme when they fought back against us reining in the excess of wall street, absolutely. that was a fight that needed to be had. when we were fighting about whether or not we would make sure americans had more security

with their health insurance, and they said, no, that is a fight we needed to have. part of leadership and governing are for but also being willing to say no to some things. governor romney, when it comes to his own party, has not displayed that willingness to say no to some of the more extreme parts of his party. >> that brings us to the closing statement. a coin toss. governor romney, you won the toss. you elected to go last. you have a closing two minutes, mr. president. >> i want to thank you and i want to thank governor romney because i think this was a terrific debate. i very much appreciated. i want to think the university of denver. four years ago, we were going three major crisis. and yet, my faith and confidence in the american future is undiminished. the reason is because of its

peopll. because the women i met in north carolina who decided at 55 to go back to school because she wanted to inspire her daughter and now has a job from the new training she has gotten. because of the company in monthly -- in minnesota that was really -- willing to give up salaries and perks for their executives to make sure they did not laa off workers during a recession. the autoworkers in toledo or detroit take such pride in building the best cars in the world, not just because of a paycheck, because it gives them a sense of pride in helping america. the question now is how we build on the strength? everything i have tried to do and everything i am proposing for the next four years in terms of our education in developing american energy and making sure pe are closing loopholes for companies shipping jobs overseas, and focusing on small businesses, or closing our deficit in a responsible, a balanced way that allows us to balanced way that allows us to invest